Bitcoin is a digital asset and a payment system invented by Satoshi Nakamoto. Transactions are verified by network nodes through cryptography and recorded in a public dispersed ledger called a blockchain.
Bitcoin is unique in that there are a finite number of them: 21 million.
Bitcoins are created as a reward for a process known as mining. They can be exchanged for other currencies, products, and services.
As of February 2015, over 100,000 merchants and vendors accepted bitcoin as payment.
Bitcoin has been criticized for its use in illegal transactions, its high electricity consumption, price volatility, thefts from exchanges, and the possibility that bitcoin is an economic bubble.
Bitcoin has also been used as an investment, although several regulatory agencies have issued investor alerts about bitcoin.
Commodity Futures Trading Commission has classified bitcoin as a commodity, and the Internal Revenue Service classifies it as property for federal tax purposes.
Is Bitcoin a digital asset security? It depends on who you ask. Some say that because it isn’t backed by anything tangible, it isn’t really an asset at all. Others believe that because it has intrinsic value (based on the fact that it is scarce and useful), it meets the definition of an asset.
And then there are those who argue that because it can be traded on exchanges and used to purchase goods and services, it is a security. So far, the SEC has not classification for bitcoin, but that doesn’t mean they won’t in the future.